SAN FRANCISCO — The state Public Utilities Commission, responding to a widening email scandal, ordered on Thursday a $1.05 million fine against PG&E and a potential $400 million reduction in what gas customers would have to pay to finance gas system improvements linked to a fatal explosion in San Bruno, in a ruling that PG&E vowed to appeal.

San Bruno officials and consumer groups lambasted the PUC”s 3-0 decision. The critics noted that while the PUC ordered PG&E to disclose all communications it undertakes with key decision makers at the agency such as the five commissioners, and top officials such as department heads and their deputies — the ruling also allows PG&E to conduct private and undisclosed meetings with potentially hundreds of key staffers that PG&E could influence without reporting the contacts.

Investigators believe the San Bruno disaster resulted from a combination of PG&E”s shoddy maintenance, flawed record keeping and the PUC”s lax oversight of the utility. Following the decision, several critics of both PG&E and the PUC suggested the agency still maintains a cozy relationship with the utility giant that it”s supposed to regulate.

“The PUC”s credibility could not be lower,” said Thomas Long, legal director with The Utility Reform Network, a consumer group. “The agency should be taking steps to restore that credibility. That”s what needs to happen. The PUC is turning a deaf ear to that need.”

The emails showed PG&E attempted to influence a crucial natural gas transmission and storage rate case that could result in an 11.8 percent increase in monthly residential gas bills.

San Francisco-based PG&E has voluntarily released dozens of emails that disclose improper contacts between the company and the PUC. The company also has forced three executives to resign because of their role in the email scandal.

“We fully understand that we are accountable when we fail to uphold high standards,” PG&E said in a prepared release. The company said the PUC decision doesn”t fully account for the corrective measures PG&E has taken to address the improper actions. The company added, “The PUC decision imposes sanctions that aren”t warranted and that may go beyond the CPUC”s legal authority. As a result, we will appeal the decision.”

San Bruno officials and TURN have demanded that PG&E release 65,000 emails related to the gas transmission case and other matters.

“The commission had an opportunity to order that all these emails are to be released,” said Britt Strottman, an Oakland attorney who represents San Bruno. “The PUC had an opportunity to act but it failed to do so.”

San Bruno officials, alarmed that the PUC isn”t going to order the release of all 65,000 emails, will now explore other avenues to force PG&E to make the communications public. That could include a lawsuit seeking a court order to compel the utility to make the disclosures, but a decision hasn”t been made yet, Strottman said.

While Thursday”s decision shields ratepayers from the full impact of the cost of the gas system upgrades, it”s unclear how the ruling would ultimately impact residential gas bills. The PUC won”t vote until sometime in 2015 on how much revenue PG&E should be allowed to collect from ratepayers, and how much to charge them on monthly bills, for the upgrades and repairs to its gas system.

In December 2013, PG&E had requested about $1.29 billion in higher revenue for improvements to the gas system. The Thursday ruling enables the PUC to deny up to $400 million of that. An equivalent one-third reduction in the fee for residential gas customers means that bills might rise just $3.49 a month rather than the currently projected $5.23, although those numbers are fluid.

The PUC reasoned that customers shouldn”t have to pay for any impact on monthly bills due to the delays in a final decision caused by PG&E”s improper contacts with the PUC.

“Through this decision, we continue to send a signal to PG&E that we expect full compliance and appropriate respect for the PUC”s processes and its staff, as well as fair treatment to its consumers,” said PUC Commissioner Carla Peterman, who crafted Thursday”s decision. “It is my hope that we can move on to a fair and balanced consideration of the appropriate investments that PG&E needs to make in its gas transmission and storage systems moving forward.”